The Economics of Self-Driving Taxis

Self-driving taxis will operate at a very low per-mile and capital cost, which means in a competitive market, it will be available at a price that easily competes with private car ownership, and even subsidized bus rides.

Google runs a gross margin that’s very high (about 67%) but on the other end consider that Uber (though not profitable yet) takes 20% of its gross cost of a ride (and pays its own expenses from that.)

Things still to learn

The cost of maintenance is still a bit of a guess. As noted, for today’s cars it’s about 6 cents/mile, including 1 cent for tires. Electric drivetrains do require less, but how much less? Cheaper cars tend to have cheaper parts, it does cost more to maintain a $30,000 car than a $15,000 one. On the other hand, if you are running a fleet, you will pick parts with the lowest total cost (both purchase and maintenance,) designing them to wear out at just the right times, and accounting and measuring the variability of that.

Cleaning is another unknown. If a passenger soils the interior in a way the internal camera sees, you can bill that to the passenger. You still will need exterior cleaning from time to time (especially on the luxury services) and at least a vacuum of the interior every so often. It will all be done very efficiently as cars pull up to the cleaning center. Robotic vacuuming is not out of the question since the cars will position themselves well and can move to help the vacuum robot. Exterior wash will be automated other than for tough things like bird droppings.

What are these small cars?

I describe a number of ways a 1-2 person self-driving taxi might be very cheap. Let’s go into more detail on why it might get manufactured for around $10K (retail would be higher.) Note that there are already many low-end 4 person gasoline cars which retail around $14,000 such as the Nissan Versa and Chevy Spark. Outside the USA, there are even cheaper cars, like the $8,000 Renault Twizzy. Some of these cars are full-width and come with dashboards full of stuff, pedals, wheels, doors, hatchbacks and more. They meet crash-safety standards and the rest of the FMVSS.

The basic commuter car will be:

  • Just over half the width and under 2/3 the length of these cars
  • Weigh perhaps half of those cars, using far less materials
  • Have no dashboard, no radio, no pedals, no wheel
  • Have only one door instead of 3 or 4, and no trunk (just an internal cargo area)
  • Have only 1-2 seats (with associated airbags and components)
  • Have vastly fewer parts
  • In the urban version, not go over 45mph, allowing a low-cost motor

What it will have is a battery pack. At 100 watt-hours/mile, a 10kwh battery would give it 100 miles of range, more than enough with recharging breaks during the day to cover the average of 140 miles/day it will do as an urban taxi. The forecast cost of $150/kwh puts that pack at $1,500. Expensive, but when combined with the much simpler electric motor power-train, a reasonable cost.

It will also have about $1,000 of sensors and computers in it. These prices get this low because these vehicles are made in the many hundreds of thousands, and eventually millions. It also has a few things not found in cheap cars, like a single power door lock.

The higher-end vehicle at $16,000 is pretty similar in design, but the extra money goes into making it more luxurious:

  • Better seats and interior materials, replaced more often
  • Better suspension for smoother ride
  • Better sound padding
  • A screen and sound system, or better ones than in the base vehicle
  • A distinctive exterior with better styling and fancier paint, to let people see you are in the higher end vehicle.
  • Power windows. (Both cars have power locks, and neither car need seat position adjustments.)
  • Some fancier interior furniture (tables, drink holders, laptop holders etc.)
  • Possibly a motorized door for easy entry (one of the more expensive add-ons)
  • Possibly a sunroof (but there will also be open-top cars for order if you want them and the weather is good.)

When I have examined the lists of luxury features on high-end cars, I have been surprised at how few of them are needed in the luxury robocar. Driver assist functions, 10-way motorized seats, motorized mirrors, telescoping steering wheels, fancy wheels, fancy lights and many other features pay no role in the robotaxi.

My numbers are aggressive - so if you doubt them, increase them. The result is still a self-driving taxi at a very low per-mile operating and capital cost, which means in a competitive market, it will be available at a price that easily competes with private car ownership, and even subsidized bus rides.

This article was republished with permission from Brad Templeton’s Robocars Blog.

About the Author

Brad Templeton · Brad Templeton is a developer of and commentator on self-driving cars. He writes and researches the future of automated transportation at
Contact Brad Templeton:  ·  View More by Brad Templeton.
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